Self-interest vs. Self-worth in a Modified Ultimatum Game Ramzi Suleiman & Yuval Samid

1. Self-interest vs. Self-worth in a Modified Ultimatum Game Ramzi Suleiman  & Yuval Samid University of Haifa Paper presented at the 13th International Conference on Social Dilemmas Kyoto, Japan, August 20-24, 2009

2. Why (sometimes) players leave money, that was offered to them by others, on the table?

3. With regard to the ultimatum game,it is widely accepted that: • Rejecting low offers serves as costly punishment of unfair proposers (Pillutla & Murnighan, 1996; Camerer, 2003). • Such behavior is evolutionary adaptive (Xiao & Houser, 2005; Sanfey, 2003). • It is triggered by negative emotions.

4. The Costly Punishment Explanation Responder receives an unfair offer Arousal of Negative Emotions (e.g.Anger) Responder Punishes the unfair Proposer (Rejection)

5. We challenged the punishment explanation by investigating whether responders might reject low offers, even if this entails no punishment of unfair proposers. • In addition, we re-examined the role played by emotions in the decisions to accept or reject low offers.

6. To study these issues, we used a novel variant of the ultimatum and dictator games. The new game, which we call the "take-or-leave" (TOL) game, resembles the ultimatum game, except in that the rejection of an offer results in the proposer receiving the entire "cake". Thus, in the TOL game, the prospects for punishing unfair proposers are entirely eliminated. Moreover, rejecting unfair offers could result in increasing the extent of unfairness rather than abolishing it.

7. Study 1 • Design and procedure:similar to the one implemented • by Xiao & Houser (PNAS, 2005), except that: • The game played was a TOL, instead of an ultimatum game, • 2.All participants played the role of responders. • We compared between two experimental treatments: • A TOL treatment, and • A TOL+ Message treatment

8. Procedure • Participants were randomly assigned to two adjacent rooms. They were instructed that one room is (ostensibly) designated for proposers and the other for responders. • In fact, participants in the two rooms played the role of responders. • Each participant was randomly assigned a letter as his or her ID in the experiment, and was told that he/she and the (fictitious) proposer in the other room, who (ostensibly) received the same letter, will become a pair.

9. In the "No Message"treatment, about three minutes after all participants in the room had completed reading their instruction, the experimenter handed each one an envelope containing a decision card, which was ostensibly sent by his/her proposer. • The card contained a decision rule and a corresponding division of 40 NIS (about $10), ostensibly written by the proposer. • About half of the participants received a 20% offer and the other half a 10% offer.

10. The responders were asked to decide whether to accept the offer (in which case it was implemented), or to reject it and return the proposed portion to the proposer (in which case the proposer took the entire amount). • After all responders had finished writing their decisions, the experimenter collected the envelopes containing the decision cards and ostensibly returned each card to the proposer who had the same ID as the responder.

11. The "Message" treatment was similar in all respects to the "No Message" treatment, except that in addition to the decision card, each responder received a blank 'message card', and was instructed to write a message, if he or she opted to do so. • After all responders had finished indicating their decisions and writing the optional messages, the experimenter collected the decision and message cards and ostensibly returned them to the proposers.

12. Decision Rules

13. Decisions Card Proposer: I choose decision rule ____, That is, out of the 40 NIS I get ___ NIS and the responder gets ___ NIS. Responder: I choose (circle your choice): 1. To accept the offer (that is, the proposer gets___ NIS and I get ___ NIS). 2. To reject the offer and return to the proposer the amount that he/she offered me (that is, the proposer gets: ___ NIS and I get ___ NIS). Message Card

14. Post decisional questions • When you received the offer, to what extent you felt: Anger • Satisfaction • Frustration • Insult • To what extent your decision was influenced by • the following considerations: • Gain as much as possible • Feel good with myself • Punish the proposer • Insult the proposer • Retaliate against the proposer • Let the proposer gain as much as possible

15. Contrary to narrow economic reasoning, we hypothesized that low offers will be rejected. • We reasoned that while the rejection of low offers in the ultimatum game could be driven by a desire to punish unfair proposers, rejecting similar offers in the TOL game serves as a costly signal (Gintis, Smith & Bowles, 2001; Bliege Bird & Smith, 2005), indicating the responders' intent to safeguard themselves from insult and to protect their prestige and self worth.

16. We also hypothesized that the costly signals are more effective when accompanied by verbal messages to the proposer. • Operationally, we predicted that the rejection rate under each of the two treatments will be significantly higher than zero and that it will be higher in the message, than in the no-message treatment.

17. Results

18. Rejection rates bytreatment& offer size

19. Messages 76.36%responders in the message treatment sent messages.

20. Examples for messages

21. Analysis of Messages Content Four students independently evaluated all the messages. They were instructed to probe, in each message, the presence or absence of anger, satisfaction, frustration and insult. We concluded that an emotion is contained in a given message, only if three or more judges indicated its containment in the message. We also analyzed the responders’ post-decisional self ratings of their own emotions.

22. Results from the judges’ evaluations and from the responders’ own self-ratings, indicate that the responders’ emotional responses were not correlated with their accept/reject decisions.

23. Results for the responders’ self-ratings of various considerations behind their decisions

24. Means for considerations behind the decisions to accept or reject an offer Differences between (1) & (2) and between (3) & (4) are significant at p = 0.001.

25. Study 1- Summary of Main Results • A sizable percentage of the responders, particularly under the "Message" condition, rejected offers of 20% or less of the "cake". • The option of sending verbal messages significantly increased the rate of rejection of low offers. • Negative emotions alone were poor predictors of the rejection decisions. • Accepting low offers was associated with the responders' desire to maximize monetary gains, while rejecting similar offers was associated with the responders’ desire to “feel good with themselves”

26. Study 2 • Main Objectives: • To replicate the results obtained in study 1 • To investigate the behavior of proposers • (in addition to responders) in the TOL game.

27. Procedure: Similar to Experiment 1, except the fact that the proposers were real players. • While waiting for the responders' decisions (accept / reject), • the proposers were asked to fill a short questionnaire which • included the two following questions: • Do you expect the responder to accept your offer? (answer: Yes/No). • Had you been randomly assigned to the role of responder, what would be the highest offer, out of 40 NIS, that you would still reject? (answer: 20, 16, 8, 4, I would not reject any offer).

28. Main Results

29. Responders’ Rejection Rates Rejection rates for low offers by message treatment and offer size

30. Responders emotions • Like in Study 1, self-ratings of emotional responses, were not correlated with the responders’ accept/reject decisions, nor with whether they sent, or did not send messages.

31. Proposers’ Offers

32. Distribution of offers In the Message condition, 20/31 (64.52%) of the proposers offered 20% or less, compared to 15/38 (39.47%) in the No-Message condition. (Difference significant at p = 0.040).

33. Proposers offered significantly less when they knew that along with the accept/reject decisions, responders could send them messages.

34. Percentage of low offers by treatment in 1 TOL game and 2 Dictator Games

35. A sizable minority of proposers who gave low offers played strategically. • About 64% (9 Out of 14) of the proposers who gave low offers and expected the responders to reject them, indicated that they themselves would have rejected similar, or even higher offers.

36. Main Conclusions • Individuals reject low offers, even when such behavior does not entail punishment of unfair others. • The seemingly evolutionary puzzle of rejecting low offers, even at a cost of reinforcing, rather than punishing, greedy others, is resolved by viewing such behavior as costly signals of an intent to protect one's prestige and self-worth. • Messages enhance costly signals (by adding verbal • content to the signals).

37. In a broader context…… • Brain researchers have recently underscored the importance of emotions in individual and interactive decision-making processes (Damasio, 1994; Bechara et al., 1997 ; Sanfey et al., 2003). • Our results suggest that, in addition to the “rational” and “emotional” dimensions of a strategic interaction, a third dimension, one which relates to interactants’ psychological constructs, like self-worth and respect, should be accounted for.

38. This idea is not new…. • Socrates, in Plato's Republic, argued that there are three distinct parts of the soul, a desiring part, a rational part, and what he labeled thymos, a Greek word usually translated as "spiritedness". • Thymos is the prideful side of the human personality, the part that demands that other people recognize one's worth or dignity.

39. The decision triangle Rational Emotional Self-worth

40. Take home (verbal) message Our results call for a strategic perspective, which puts less focus on outcomes and more focus on social and psychological variables, such self-worth, prestige, status and power.

41. Thank you!